Saturday, April 4, 2020

Organisations fail to take up CEDA’s pay-within-a-day challenge

Of all the challenges that Botswana has had, by far the best and most substantive is one originated by the Citizen Entrepreneurship Development Agency (CEDA).

Officiating at the CEDA/Development Bank of Southern Africa University Challenge awards ceremony two months ago, CEDA’s CEO, Thabo Thamane, committed his organisation to paying all suppliers and service providers within 24 hours. That announcement was made on January 23 this year and on February 14, the Gambling Authority showed its love for the nation with a very special Valentine’s Day gift. A post put up at 1028 a.m. on its Facebook page reads: “Gambling Authority accepts the CEDA Challenge
#PaySuppliersIn24Hrs.” Below is an advert, which the Authority has also ran in newspapers, with an outsized picture of a mohawked DJ with earphones and dark sunglasses who provides testimony about his own experience of doing business with the Authority: “I played at GA Christmas party and got paid within 24HRS. I was amazed and happy. Thank you GA.” Through a hashtagged message, GA itself states that it pays suppliers within 24 hours, adding that “all you need to do is submit your invoice quoting PO number.” The “PO” refers to purchase order. Perhaps it should have been GA leading the way because the business entities it regulates – casinos – typically pay lucky gamblers immediately but better late than never.

In a social-media era, some will appreciate “challenge” in the context of Facebook monkey business but there is a non-frivolous, real-life challenge that CEDA is responding to and it is not surprising that it is taking the lead. The Agency provides financial and technical support for citizens, most of whom do business with the government because the country’s private sector is woefully under-developed. However, going back more than decades, government ministries and departments typically pay suppliers and service providers extremely late. This has resulted in some commercial enterprises – including those funded by the government itself through CEDA – having to shut down due to severe financial problems. If a visual metaphor would be more helpful, CEDA builds houses with money supplied by the government but that same government later tears down those same houses. The late-payment problem is not confined to the government because the private sector also does the same thing.

The Botswana Gazette quotes Thamane as saying that late payment affects the ability of CEDA-funded companies “to settle their own debts, pay salaries and service other clients.” It also quotes Thuli Johnson, GA’s CEO as saying the following: “We must acknowledge the role that small, medium and micro enterprises play in our economy. They are our engines of growth and they have massive potential to create employment. So, as the Gambling Authority, we are committed to ensuring citizen economic empowerment by paying our service providers, who are mostly SMMEs, within 24 hours.”

By going public with its commitment to pay suppliers within 24 hours, CEDA had evidently hoped that many more organisations would take up its challenge but that has not been the case. The climb will be steeper because even at the Ministry of Finance and Economic Development, late payment – which is a crisis – is not seen as such. In his first budget speech, Minister Dr. Thapelo Matsheka didn’t acknowledge this crisis and in the only two instances where he uses “payment”, was not in relation to late payment. Of all the finance ministers Botswana has had, Matsheka is in a category all his own because of his employment record. He was CEDA’s first head and would definitely know what harm late payment is doing to CEDA-funded businesses. The problem would have been most pronounced during his stint as CEO because that was when it became fashionable for organisations to hold “retreats” at hospitality establishments located in the bush. Some CEDA-funded hotels and lodges collapsed precisely because of late payment and after they had used their own money to cater for what they had mistakenly thought were regular customers.

Part of the reason why the government is failing to deal with the late-payment crisis is that those who can solve it, short-circuit the system where their own personal interests are concerned. Two examples. In one, when a former finance ministry permanent secretary came to collect a cheque for a company owned by his wife, he waited in the car park at the ministry headquarters in Gaborone. Needless to say, the cheque had been processed in record time. He took delivery of and even signed for the cheque in the accounting ledger book from the comfort of a lavishly cushioned Mercedes Benz. In another, someone even more senior – a sitting president – scribbled a terse instruction to the education ministry to have an invoice paid immediately. The instruction was written on a note attached to the invoice and signed off with his name and position – “President of the Republic of Botswana.” The invoice was not routed through the minister or permanent secretary’s office but sent directly to the account’s department by special courier service.

Matsheka, who knows the late-payment problem all too well, has had to answer a parliamentary question about it. When the Kanye North MP, Thapelo Letsholo, raised concern about the late payment of suppliers by government departments, Matsheka regurgitated the exact same answer that was given by Baledzi Gaolathe more than a decade ago when he was finance minister himself. Matsheka basically said that there are rules to prevent late payment – which answer overlooked the fact that those rules are not working and have not worked for decades. It would seem that the ministry has a TV-dinner answer that it routinely microwaves and gives to whoever is the incumbent minister to serve in parliament.

Missing in action as late-paid companies collapse up and down the country is the opposition. Going back decades, the opposition has never sought to spotlight late-payment as an impediment to citizen economic empowerment. This means that while the opposition has made sporadic, by-the-way mention of late payment of suppliers and service providers, it has never really highlighted and recognised it as a crisis. Meaningful opposition advocacy would force a jittery cabinet to take meaningful action – not merely (literally) sit back as one of their own regurgitates a meaningless, decades-old answer in parliament.

RELATED STORIES